Protection of Whistleblowers
MATERIAL IMPACT AND THEIR INTERACTION WITH STRATEGY AND BUSINESS MODEL
Impact in the area of whistleblower protection
The materiality assessment identified whistleblower protection as material in fiscal year 2024 due to its actual and potential positive impact. The Volkswagen Group achieves a positive impact through a corporate culture built on trust and integrity, reinforcing the willingness of employees and other stakeholders along the entire value chain to report unethical behavior and misconduct. The existing impact is set to be further expanded in the medium term, enabling the Volkswagen Group to positively influence whistleblower protection going forward and encourage all stakeholders to continue to report misconduct.
Interaction with strategy and business model
Protection of whistleblowers falls under the umbrella of integrity and compliance and is therefore also part of the Group strategy. Both employees and third parties can submit anonymous reports via the whistleblower system, which is why whistleblower protection is applicable throughout the entire value chain.
The impacts identified in the materiality assessment have an effect on the Group’s business model and value chain. The Volkswagen Group uses various actions in the area of whistleblower protection to emphasize the influence of its material impacts on the business model and value chain. These are intended to help to maintain and reinforce the positive impact, particularly through training on the whistleblower system and the consequences of misconduct.
An in-depth description of all actions in the area of corruption and bribery is provided in “Actions: Corruption and bribery”.
POLICIES: PROTECTION OF WHISTLEBLOWERS
Compliance with legal requirements, internal rules, the Code of Conduct and the Code of Conduct for Business Partners has top priority in the Volkswagen Group. The Volkswagen Group’s success is based on integrity and compliance. To achieve this aim, it is important to identify any potential misconduct by the Group’s own workforce or its business partners’ staff and take step to prevent it. The Volkswagen Group’s Central Investigation Offices therefore operates an independent, impartial and confidential whistleblower system, among other things, in order to review any potential employee misconduct. The whistleblower system is addressed in various Volkswagen Group policies, particularly in the Code of Conduct and Code of Conduct for Business Partners, which are freely accessible on the Volkswagen Group website.
Whistleblower system
The Volkswagen Group’s whistleblower system is a key component of business ethics and is based on the principles of protection, fairness and trust. The whistleblower system is the central point of contact for reporting cases of rule-breaking by employees of the Group or by suppliers. This includes in particular white collar crimes, acts of corruption, tax offenses, environmental offenses, human rights violations, infringements of antitrust and competition legislation, money laundering and terrorism financing, breaches of product safety and licensing regulations, and serious breaches of data privacy. The reporting channels of the whistleblower system are also a means of providing information relevant to the Lieferkettensorgfaltspflichtengesetz (LkSG – German Supply Chain Due Diligence Act) on the Group’s own operations or those of the supply chain. The whistleblower system is for the entire Volkswagen Group and was enacted by the Group Board of Management. The whistleblower system’s objectives are to protect the company, the whistleblower, and everyone who helps to uncover, investigate and stop misconduct and compliance breaches. Breaches of the prohibition of discrimination are treated as serious breaches of the rules.
Departments that act as key contact points (KCPs) play a central role in the whistleblowing process for reporting, investigating and sanctioning employee misconduct. These departments are frequently the first point of contact for reports of possible breaches of laws, regulations, or the Code of Conduct. The departments’ contacts include local compliance officers, internal auditors, representatives of the Human Resources department, and decision-making and escalation committees for product safety and technical conformity regulations. As set out in the Group policy on the whistleblower system, active elements of the whistleblower system include the Legal department, Internal Audit, the Security department, HR, and the Compliance department.
The reporting channels are available around the clock and accept reports in all languages, including on supplier-related risks and breaches of human rights and environmental standards. They include an online reporting channel, which accepts reports in different languages, an app, an international 24-hour telephone hotline and an external attorney who acts as an ombudsman. The reporting channels are communicated to employees in all mandatory compliance training and through other communication formats. The whistleblower system is intended to avert damage to the company, the entire workforce and other stakeholders through binding principles and regulated procedures. The Central Investigation Office in Wolfsburg is responsible for coordinating the Group-wide whistleblower system.
The employees there process whistleblower information concerning Volkswagen AG and any of its subsidiaries that do not have their own investigation office and also process reports with relevance for the Volkswagen Group. Employees from the Audit, Security and Legal Affairs departments investigate the cases. AUDI AG, Dr. Ing. h.c. F. Porsche AG (Porsche AG) and TRATON SE each have separate investigation offices for themselves and their subsidiaries. There is also a regional investigation office at Volkswagen (China) Investment Company Ltd. It processes whistleblower information concerning Volkswagen AG’s and Audi AG’s Chinese subsidiaries.
In individual cases, the relevant investigation office also commissions investigations by independent and external third parties, such as law firms or auditors. This may occur especially when the information concerns members of the Board of Management or if cases are exceptionally complex – particularly with imminent legal consequences for the Volkswagen Group (e.g. in the event of particularly serious corruption or possible breaches of antitrust and anti-competitive law).
Events in the departments complement the range of services provided by Group Integrity & Compliance. One separate external format is ComplianceXChange, in which experts share information with other DAX or European companies on various focal points, such as whistleblower systems and the prevention of money laundering.
An IT system, internal controls and multiple-party verification assist employees in handling suspicious activity reports. Whistleblower system metrics are reported to the Board of Management and the Supervisory Board at regular intervals.
The Volkswagen Group’s Group Integrity & Compliance organization is responsible for the topic of whistleblower protection. It belongs to the Integrity and Legal Affairs function of the Board of Management.
ACTIONS: PROTECTION OF WHISTLEBLOWERS
The whistleblower system’s primary objective is to enable suspected misconduct, particularly serious compliance breaches, to be reported and investigated in a fair, transparent and efficient way. At the same time, the protection of the whistleblowers, employees, people supporting the whistleblowers or the investigation, and those affected must be ensured.
The Group policy on the protection of whistleblowers applies to all controlled companies and employees of the Volkswagen Group and must be implemented in all controlled Group companies. It conclusively and comprehensively regulates the activities both of the investigation offices and of the investigating units in the investigation of potential compliance breaches that are received through the whistleblower system’s channels. It contains standards and general codes of practice for implementing, creating and executing whistleblower systems and internal investigations in the Volkswagen Group, and sets out the competencies, responsibilities, and cooperation requirements to be established within the Volkswagen Group. The investigating units can define additional regulations, provided that this policy and its provisions do not conflict with the Group policy.
Training on the whistleblower system
To ensure that all employees are informed about the whistleblower system, the company provides training on its use. The Code of conduct compliance training, which is mandatory for all employees, includes an explanation of the whistleblower system and the protection mechanisms for whistleblowers. This training also clarifies the legal consequences of discriminating against whistleblowers. Employees who might frequently come into contact with serious breaches of rules due to their work receive in-depth training. This includes, for example, employees in the Audit, Security, Human Resources, and Legal Affairs departments or those in Group Integrity & Compliance.
Consequences of misconduct
Proven misconduct may, depending on its severity, be sanctioned by a warning, a reprimand, or dismissal. Following serious breaches of rules that are sanctioned, structured root cause analyses are conducted in order to prevent similar incidents in the future.
The Volkswagen Group assures all whistleblowers and people who support the whistleblowers or the investigations of their protection from any reprisals they could experience due to their reports. This protection is set out in the Group policy “Volkswagen Group whistleblower system” and described in the Code of Conduct. Breaches of this ban on discrimination are treated as serious compliance breaches. The Volkswagen Group also takes account of international laws on whistleblower protection, such as the EU directive on whistleblower protection, its national implementation acts, and the Lieferkettensorgfaltspflichtengesetz (LkSG – German Supply Chain Due Diligence Act), through the provisions in this Group policy.
TARGETS: PROTECTION OF WHISTLEBLOWERS
No measurable, outcome-oriented targets within the meaning of the ESRS are currently defined in relation to the protection of whistleblowers. The effectiveness of the policies and actions in relation to the positive impact identified through the materiality assessment performed this year for the first time is currently not monitored.
Within the Volkswagen Group, regular communication takes place on the topics of integrity and compliance in order to increase employee awareness of appropriate conduct and the Group’s rules and values. This particularly entails communications concerning the whistleblower system, such as internal and external communication of the whistleblower reporting channels.
The Volkswagen Group has defined minimum standards based on various legal and professional requirements and best practices that apply depending on the location of the company – inside or outside the EU. Each company is required to check whether there are country-specific or other local legal requirements and to adapt the corresponding information if necessary.
The Central Investigation Office prepares detailed statistical analyses on the Volkswagen Group’s global whistleblower system at least once a quarter to ensure the risk assessment and ongoing optimization of the compliance management system.
The Group Board of Management and the Audit Committee of the Supervisory Board receive an updated statistical report on the whistleblower system once a quarter at their meetings. This report includes data on new whistleblower reports, their categorization, and the development of open cases in the Central Investigation Office, the brand-specific investigation offices of AUDI AG and TRATON Group, and the regional investigation office in China. Figures on the Porsche AG Group’s whistleblower system are reported to the Porsche AG Board of Management at regular intervals.